GROWTH Innovation: A practical framework for development

Innovation-GrowthIn TomorrowToday we believe from experience and observation of clients around the world, and through reading and tracking innovation trends, that there has been an evolution in Innovation practice just as there has been in most other areas of business.

We have a framework called GROWTH Innovation that facilitates thinking and discussion of effective innovation within the modern post-recession context.

Glocal – Global relevance built off a local beachhead / foundation

Radical – Incorporating “Black Swan” thinking

Open – Drawing on non-traditional sources, and acquisition

Wisdom and Courage – Led by Adaptive leaders

Tested – Developed with a tolerance for failure

Helpful – Real Needs vs Felt Needs

Our experience is that the framework stimulates clients’ thinking and they then launch into peripheral application that is relevant to their local industry or innovation challenge.

Prior to the global recession we were receiving as many requests for presentations dealing with Innovation as any of our other frameworks.  As the recession bit one of the areas where we noticed the impact was that as organizations dug in to survive / ride out the tempest Innovation dropped off the radar.  As tough times hit, companies had two choices – grow revenue, or trim costs. It seems most companies ended up taking the latter route, with only a few exceptions following the former.

The major impacts of the recession have been absorbed by most organizations and we are once again starting to see financial reports that reflect growth– and with this a renewed interest in unlocking the competitive advantage inherent in innovation.

We did not sit idly by during the recession and ignore innovation, but tracked activity in the sector.  We have used the insights gleaned through this period to develop a simple innovation framework that we believe will assist organizations to engage / re-engage with innovation as a driver of growth.

At the moment innovation driven growth is something that makes sense and may be seen as an exciting option, but soon investors and shareholders are going to lift their heads and start agitating for innovation and new growth. When this happens, organizations and managers who have developed momentum will be best positioned to deliver innovation benefits for their key stakeholders.

Glocal

A phrase coined to marry Global and Local in one word.  For the purposes of Innovation this means that programmes and processes should have local roots, but have global potential.

We live in a globalised world, so why shouldn’t our innovation planning take that into account and look to the global market?  The flip side of globalization is that the market has become so massive that it is more likely that the perspectives of the global market will overwhelm innovation processes leading to diffused focus, and ultimately ineffective innovation.

Rather, focus on the local market where there are fewer variables, the conditions are better known, and it is easier to scale innovation activity.  That said, this local focus should have the global market within its peripheral vision.  We should always consider how innovation developed for a local opportunity may be scaled up, or tweaked, for the global marketplace.

MTN, the South African mobile phone company, managed this well when it developed pay-as-you-go services.  The local market had a limitation; the largest segment of potential users couldn’t afford, or wouldn’t qualify for, contract cell services.  One of the issues was inconsistent income flow limiting ability to commit to a fixed monthly payment.  MTN developed a system for the local market that would allow people to buy small amounts of airtime.  When they had exhausted this they could buy more when they had cash available.  This model has now become a global product across most networks.  It has also allowed MTN to expand through other similar markets across the African continent, and in the process become the biggest mobile phone company in Africa.

Focus locally, expand globally.

Radical

How do most innovation processes generate ideas?  Either through a “suggestion box” tool where ideas are dropped into a funnel and aggregated with the hope that something useful will come out the other end.  Alternatively, we gather stakeholders around a table and have a brainstorm to generate ideas.  Neither of these processes is effective at stimulating Innovation.

Brainstorming doesn’t generate Innovation because of the group dynamics that are generally at play in a corporate meeting room.  These dynamics exist regardless of any perception, on the session leader’s part, that permission has been given to be radical and creative.

In corporate culture people are very aware of not rocking the boat or being seen to be too weird because this can make them seem too risky, and this is severely “career limiting”.  Consequently, brainstorms cut down the options to the safest and most middle of the road.

Brainstorms settle into what we can do in the current context without being too radical.  Those around the table also secretly hope that the work is handed to someone else to deliver because they are at capacity.  There is a tacit perspective that if it is handed to me it will be done once I am finished with the things I already need to do.

In an article on Harvard Business Review’s blogs Gianpiero Petriglieri writes:

“I have a name for this cocktail of deference, conformity and passive aggression that chokes people and teams. I call it violent politeness.

I have witnessed it countless times. After some discussion, often labeled “brainstorming,” a group will go along with the most innocuous suggestion and follow it halfheartedly, keeping itself busy to avoid admitting what everyone knows: it is not going to work”.

We need to apply “Black Swan Theory” to our Innovation processes. Nassim Nicholas Taleb developed the concept to deal with wild card events that disrupt, and significantly alter, the path of history.  His definition of Black Swan events lists 3 elements.

  1. The event is a surprise (to the observer).
  2. The event has a major effect.
  3. After the first recorded instance of the event, it is rationalized by hindsight, as if it could have been expected; that is, the relevant data were available but unaccounted for in risk mitigation programs. The same is true for the personal perception by individuals.

He also points out that a Black Swan event for the Turkey is not a Black Swan for the butcher.  In other words, perspective matters – are you the orchestrator or victim of this change of circumstances?

Radical innovation has a Black Swan effect on its environment. Those out of the loop didn’t see it coming. It changes the way business is done within that industry. Competitors look back and realize that they could’ve done the same thing because all of the signs were there.  The point is that they didn’t.

A deep-dive into Black Swan thinking is a subject for another article, but for our purposes we need to set structures in place that allow us to look further and broader than competitors.  We need to avoid processes that stimulate “safe” thinking.  In so doing we can come up with the innovations that will revolutionise our worlds.

Today Nokia is known as a manufacturer of mobile phones, but for most of its history it manufactured rubber products. The radical thinking we are eluding to is seen in the shift reflected here.  Can you imagine being in the meeting when someone suggested moving away from rubber into mobile phones – a technology only just getting going?  This was a Black Swan, radical thinking innovative move that touched the life of most people who lived through the 1990’s and early 2000’s.

Open

Type “Innovation” into a browser and you will be inundated with responses -  118 Million on Google.  Many of those results look similar to the list in this article by Soren Kaplan in Fast Company.

6 Ways To Create A Culture Of Innovation

1. Be intentional with your innovation intent

2. Create a structure for unstructured time

3. Step in, then step back

4. Measure what’s meaningful

5. Give “worthless” rewards

6. Get symbolic

No rubber stamps

Developing an internal innovation programme is the “Holy Grail” of corporate innovation departments. Unfortunately, the real returns and benefits delivered by the majority of these initiatives are limited, to non-existent.  There are a few exceptions like Google or 3M – companies whose 20% rules, or innovation forums have become the stuff of corporate urban legend – but most organizations that attempt to replicate these success stories don’t get it right.

There are many reasons that contribute to the general failure of these clone / copy cat programmes, but the logical conclusion needs to be drawn that barring the odd exception, innovation doesn’t generally come from within an organisation, but from without.  In many cases industry-changing innovation has come from risky, wobbly, fly-by-the-seat-of-their-pants start-ups.

Even though Google has seen some products generated out of their 20% rule they don’t limit their innovation and growth to these internal sources.  Google, Facebook, 3M, GE, and similar innovation bastions are always looking outside themselves and acquiring startups that show potential or whose products can be bundled with existing ones to open new markets.

Sebastian Thrun developed the Google car, but when the Open Courseware [MOOC’s] company he ran was acquired by Google he joined the fold.  In late 2013 Google bought Boston Dynamics for their robotics, not a part of Google’s current product suite.  Facebook offered $1Billion for Snapchat in Oct 2013, and actually bought WhatsApp for $19Billion in early 2014.  Successful innovative organizations are always buying others who expand their horizons in ways they couldn’t achieve internally….and these are the companies we all look to because they are getting the internal stuff right.

If you are not in a position to acquire genetic diversity for your innovation gene pool there are other ways to do it.  Change the traditional way of doing business:

  • Instead of hiring MBA’s recruit people from the arts, engineering, design, philosophy, or other creative areas. Look for MFA’s, Mth’s, MBCHB’s, MPhil’s, etc.
  • Bring some of your most junior staff into innovation meetings and tell senior staff they are not allowed to disagree with anything raised by them.
  • Set Google Alerts for topics that seem too radical for, or too risky for you to raise comfortably now. See what comes your way that will enable you to position the idea with supporting info in the near future.
  • Interview your kids and their friends and get a sense of how they view the world. Commit to not writing anything off, or editing it as the fancy of a child.  In the 1980’s every child dream of being able to talk to friends across a screen, for parents it was science fiction….today we have Skype, iChat, and countless apps that do just that.

Wisdom and Courage

Regardless of where innovation is sourced there is one common pre-existing requirement within an organisation, namely a culture that embraces and permits change.

In his book “The Leadership Mystique” Manfred Kets de Vries from INSEAD speaks about Organisational Pathology.  He uses the logic of pathology that works through the constituent parts of a corpse to understand what led to the person’s death. And, once that factor is identified it is possible to corroborate the conclusion by working back up to the macro level to see the symptomatic evidence of the pathogen’s impact.

Leaders are the one’s who enable am innovation culture within an organisation.  If the leader is risk averse and change avoidant the organisation will be similar.  On the other hand, if an organisation is risk averse and battles to deal with change, then it is probable, regardless what the leaders say to the contrary, that the leadership battle with change and treat risk like a cancer.

For Innovation to be a reality within an organisation its leaders need to have the wisdom and courage to deal with the uncertainty inherent in innovation.  They need to be adaptive leaders who know what to do when they don’t know what to do.

Keith Coats has written extensively on Adaptive Leadership on the TomorrowToday blog and ezine.  Search our archives for relevant articles on this and other leadership topics.

Tested

One of the benefits of having acquisition as part of your innovation strategy is that the start up paid the “school fees” associated with the testing and trying of the product.

A story is told of Thomas Malone snr during his time heading up IBM.  A manager had worked on something that failed and cost the company millions of dollars.  On hearing that he had been summoned to appear before Malone the manager typed up his resignation and put it on Malone’s desk as soon as he walked in.  Thomas Malone looked at him and refused to accept his resignation.  His reason – he had just paid millions on the manager’s education and he wasn’t about to allow him to walk away.

Innovation needs to be rigorously tested, and broken, before it goes to market. Unfortunately, in many cases this isn’t done effectively because companies have a low tolerance for failure.  So, testing is not tough enough.

The purpose of testing is to TRY break the innovation and cause failure.  Too often testing is designed specifically to support strengths that everyone is aware already exist and it is merely a rubber-stamping operation.  If the testing is too tough and the product fails than the individual / team are deemed to have failed and are censured for it – consequently, testing is kept safe.

When the innovation gets to market there are always those who overload it, use it in a way it wasn’t intended for, or just find design gaps that weren’t tested, pushing it to failure. Innovation FAIL!

Microsoft have become infamous for this when they launch new products. Patches are sometimes needed within days of launch.  Now when Microsoft announces the launch of new products everyone is loath to become early adopters because they don’t want to do the company’s testing for it.  The banking industry worldwide currently faces a challenge because 80% of all ATMs still run on Windows XP.  Banks haven’t wanted to switch operating systems because they finally have stability and security and they are not willing to risk the upheaval of switching systems.  The looming crisis is that in mid-2014 Microsoft will no longer support Windows XP. No security patches, no support services, no new applications written for the operating system.  Citi group and others are now negotiating special support arrangements with Microsoft that will cost hundreds of millions of dollars so that they can continue to use XP.  All of this inconvenience for its customers, and costs transferred to its customers’ customers are because Microsoft has developed a reputation of rolling innovations out to market without effective testing.

Helpful

This is the most innocuous part of the GROWTH innovation framework because it is the most obvious…. You would think.

So many innovations fail because they didn’t make life better for anyone.  The key to successful innovation is not how futuristic it is, or how creative it is, or the combined IQ’s points of it’s developers / designers, or any other perceived WOW factor.

If an innovation doesn’t help do something better it WILL fail.  No amount of threatening, bribery, marketing, PR, advertising, or outright lying will out do the simple need for something to work, and add value.

This facet of innovation is not just limited to product development.  Innovation will be successful if it adds value in one, or more, of three areas:

People: Does it connect with an emotional, physical, or psychological trigger in a person?  These individuals may be employees, customers, or potential individuals in either of these areas.

Process: Process innovation makes organizations, teams, or specific activity more effective.  This may result in quicker turn-arounds, less waste, lower costs, or increased profitability.

Products: This is where innovation energy is generally focused but it needn’t be the only, or even primary, focus area. Product innovation is often not possible without first delivering innovation within the people and process spheres.  New innovative products emerge from people supported by effective engaging processes.

The litmus test for deciding if an innovation is going to be a game changer is not that it is being asked for by people or the market, but rather that it effectively does something not being done already.  Innovation practitioners need to distinguish between Real Need and Felt Need.

Ask customers what they are looking for in innovation and they will say that they want more of what you are doing today, but cheaper and faster.  The transition from silent movies to talkies was not something people initially wanted; similarly the move from black and white to colour was seen as unnecessary. Fax machines were not needed in the 80’s because customers said they could use the phone or the mail for the same thing depending on urgency.

If customers had their way none of these, and countless other innovations, would’ve made it to market as the perception driven by a Felt Need crowded out the opportunity to meet a Real Need, and in the process create every innovator’s dream – a new market that didn’t exist before.

References:

http://www.fastcodesign.com/1672718/6-ways-to-create-a-culture-of-innovation?utm_source=facebook

http://blogs.hbr.org/2014/03/why-work-is-lonely/

http://en.wikipedia.org/wiki/Black_swan_theory

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